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Soc Indic Res

DOI 10.1007/s11205-015-0964-z

The Colombian Multidimensional Poverty Index:


Measuring Poverty in a Public Policy Context

Roberto Angulo1 • Yadira Dı́az2 • Renata Pardo3

Accepted: 10 April 2015


 Springer Science+Business Media Dordrecht 2015

Abstract Previous multidimensional indices for the Colombian context, such as the
Unmet Basic Needs Index or the Living Conditions Index, have lost their public policy
relevance and arguably have become poor instruments for poverty measurement. This
paper presents the Colombian Multidimensional Poverty Index (CMPI), a synthetic indi-
cator that overcomes the methodological problems from previous multidimensional indices
and has a broad public policy scope of use. The CMPI is based on the methodology of
Alkire and Foster (J Public Econ 95:476–478, 2011a) and is composed of five dimensions
(education of household members, childhood and youth conditions, health, employment
and access to household utilities and living conditions). Additionally, it uses a nested
weighting structure, where each dimension is equally weighted, as is each indicator within
each dimension. This paper proposes the CMPI for tracking multiple deprivations across
the national territory, to monitor public policies by sector and to design poverty reduction
goals, among other public policy uses. Analysis of the results demonstrates that multidi-
mensional poverty in Colombia decreased between 1997 and 2010 in both urban and rural
areas, but imbalances remain.

Keywords Multidimensional poverty  Colombia  Alkire and Foster measures 


Deprivation  Urban and rural differences

& Yadira Dı́az


bydiaz@essex.ac.uk
Roberto Angulo
roberto.angulosalazar@gmail.com
Renata Pardo
renata.pardo@uniandes.edu.co
1
Bogotá, Colombia
2
Institute of Social and Economic Research (ISER), University of Essex, Wivenhoe Park,
Colchester, UK
3
Universidad de los Andes, Bogotá, Colombia

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1 Introduction

Several countries in the developing world have started to move away from relying solely
on unidimensional measures of poverty based on income or consumption. They are now
complementing these indicators with multidimensional indices that also capture house-
holds’ achievements in a range of areas relating to non-tradable goods.
Since the end of the 1980s, many countries, such as those in Latin America, have used
the Unmet Basic Needs Index (UBN), developed by the Economic Commission for Latin
American Countries (ECLAC) specifically to measure multidimensional poverty. The
UBN is a composite index comprising ordinal indicators on households’ living conditions,
such as housing materials, access to public services, critical overcrowding, economic
dependency and school attendance. It identifies households with unmet basic needs as
those deprived in at least one indicator (Muñoz 1995; PNUD et al. 1987). Other multi-
dimensional indices proposed by supranational organizations have also been widely dis-
cussed and disseminated among academics and policy-makers across the region. This is the
case with the World Bank’s recent Human Opportunities Index (HOI), as well as the
Human Development Index (HDI) and the global Multidimensional Poverty Index (MPI),
both launched by the United Nations Development Programme (UNDP).
In particular, the Colombian government has made substantial advances in this area by
implementing and using multidimensional indices proposed by supranational organiza-
tions, such the UBN, the HDI or the Colombian HOI (Vélez et al. 2010). In addition,
Colombia has developed its own multidimensional indices, such as the Living Conditions
Index (LCI) and the index used for targeting social programs, SISBEN. The LCI measures
households’ living standards in regards to access to services, human capital, demographic
conditions and housing materials, and it uses a principal component methodology (Cortés
et al. 1999a, b; González and Sarmiento 1998). The SISBEN, on the other hand, is an index
used to target potential beneficiaries of social programs. Its name, SISBEN, corresponds to
its acronym in Spanish: Sistema de Identificación de Potenciales Beneficiarios de Pro-
gramas Sociales. The SISBEN has had three versions. Its latter version corresponds to a
living standards index that uses the fuzzy sets method to estimate a household score that
varies between 0 and 100, with the poor having lower scores. The cut-off points, differ-
entiated for each social program, are defined based on the objectives and characteristics of
the population they serve (Castano et al. 1999; Cortés et al. 1999b; Florez et al. 2011).
However, these existing Colombian multidimensional indices have proved been not
entirely satisfactory. On one side, none of them satisfy a set of properties necessary for
consistent profiles of measured poverty, as proposed by the axiomatic approach defined by
Sen (1976). For example, a multidimensional poverty measure should capture welfare
losses that result when poor households face greater deprivations. Nevertheless, the Unmet
Basic Needs measure does not change if a poor household increases its number of de-
privations. In addition, a poverty measure should only reflect improvements among the
universe of poor people, a property that the Living Conditions Index fails to fulfil, as it is
sensitive to changes in the living conditions of the non-poor. On the other side, there are
problems with their content as well, so they are arguably becoming poor instruments for
poverty measurement in the Colombian context.
These limitations, together with the need of a multidimensional poverty measure able to
capture the actual living conditions in Colombia and the effect of public policies on the
reduction of poverty, motivated the Colombian National Planning Department to design an

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improved multidimensional poverty index.1 In this context, this paper presents the pro-
posed Colombian Multidimensional Poverty Index, henceforth CMPI.
The CMPI embodies a standard of living notion that considers household deprivations
as constitutive elements to describe the lack of a minimum standard of living. It includes,
among others, dimensions regarding early childhood and youth conditions, access to health
services and labour conditions, quality of life descriptors that had not been included in
previous multidimensional indices. The dimensions and indicators that the CMPI includes
summarize the social policy priorities of the government that are based on national social
agreements. The CMPI uses the multidimensional poverty measurement methodology
proposed by Alkire and Foster (2011a) and, hence, identifies as multidimensionally poor,
households that experience a greater number of considered deprivations.
In general, when multidimensional approaches are used to measure poverty, questions
arise about which evaluative space should be used, the dimensions and indicators to be
considered within such space, the procedures to be used for aggregating indicators and
individuals, the unit of analysis and the identification of the poor. In the case of the CMPI,
most of the answers to those questions rely on value judgements based on social agree-
ments. In particular, Sect. 2 of this paper carefully describes the criteria used to answer
those questions in order to design this multidimensional poverty index for the Colombian
case. We present the key results obtained from the Index in terms of trends of poverty rates
within the whole country, across urban and rural areas and in comparison to income and
subjective poverty (Sect. 3). We also outline public policy applications for our proposed
CMPI (Sect. 4) and possible further developments for the CMPI (Sect. 5). We finalize this
paper by presenting some concluding remarks.
It is worth highlighting that at the time of this paper’s development, the CMPI was
being used as public policy tool in the Colombian context to track deprivations across the
country, to monitor public policies by sector and to estimate the multidimensional poverty
reduction goal of the 2010–2014 national development plan.

2 Data and Methodology

In developing a multidimensional poverty index, several decisions need to be made re-


lating to the data to be used, the unit of analysis and the poverty methodology to be
applied. The CMPI is proposed to assess poverty as a conjunction of n dimensions of
quality-of-life simultaneously observed and experienced by households. For this purpose,
we use the Alkire and Foster (2011a) multidimensional approach to poverty, henceforth the
AF methodology. Additionally, we select household as the unit of analysis, and we assess
overall society multidimensional deprivation with the Colombian Living Conditions Sur-
vey. These decisions are discussed in this section.

2.1 Data

When measuring household simultaneously experienced multiple deprivations, the


methodology requires that all indicators come from the same data source. However, once

1
The National Planning Department (NPD) is a technical entity that promotes the implementation of the
strategic vision of the country in the social, economic and environmental sectors through the design, orientation
and evaluation of public policies in Colombia; the management and allocation of public investments; and the
realization of said plans, programs and government projects (see http://www.dnp.gov.co/).

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the source is chosen, its own limitations determine the thematic scope of the indicators to
be used. For the Colombian case, the selected data is the Colombian Living Standards
Measurement Surveys (LSMS). The Colombian LSMS is a nationally representative sur-
vey conducted by the Colombian National Statistical Department (Departamento Ad-
ministrativo Nacional de Estadı́sticas—DANE) in order to track living conditions among
the Colombian population. The Colombian LSMS, which began 1993, is the most complete
survey measuring socio-economic conditions in Colombia. The survey is a repeated cross-
sectional dataset with waves in 1993, 1997, 2003, 2008 and 2010. After 2010, the survey
was collected on an annual basis. By selecting this survey as the main source for the CMPI,
the government will be able to continue to track multidimensional poverty year by year.
The survey implements a clustered, multi-stage, stratified and probabilistic sample of
9121 households for 1997, 22,949 for 2003, 13,600 for 2008 and 14,801 for 2010. The
estimates of the current paper include results for 1997, 2003, 2008 and 2010, based on the
LSMS. The results were calculated at the national level, for urban and rural areas, and by
regions (Atlantic, East, Central, Pacific, Bogotá, San Andrés, Amazonı́a and Orinoquı́a and
Antioquia). The LSMS does not include information for the territories of Guainia, Gua-
viare, Vaupes and Vichada. This paper focuses the discussion on the national figures and
the rural and urban disaggregation. The regional analysis can be accessed by request.

2.2 Household as the Unit of Analysis

We select the household as the CMPI’s unit of analysis. Following the Colombian LSMS
2008 definition of household, a household is defined as a person or group of persons,
relatives or non-relatives, who occupy all or part of a particular dwelling, address basic
needs under a common budget and often share meals.2
The selection of this unit of analysis implies that deprivations are assumed as simul-
taneously experienced by all household members rather than by isolated individuals. For
instance, if child employment is a deprivation (children between the ages of 5 and 17
working), we assume that this deprivation impacts not only the child who is working, but
the whole household. This means that all other individuals living in this household are
considered deprived with respect to this dimension (child labour). Four good reasons were
found as jointly important for using household as the unit of analysis, and we proceed to
describe them as follows.
Previous indices of poverty in Colombia have focused on the household or the family,
and so have strategies directed towards the reduction of poverty. SISBEN, the main
instrument for targeting potential beneficiaries of social programs, is a standards-of-living
measure that uses the household as the unit of analysis. Likewise, most of the Colombian
anti-poverty policies and programs are designed to intervene at the household or family
level. For instance, the objective of the Network for Overcoming Extreme Poverty
(UNIDOS) is to ensure that households living in extreme poverty have access to all
programs where they are eligible; in order to achieve this goal, UNIDOS offers households
an agent to help them in the process. In addition, the government’s conditional cash
transfer program, Families in Action (Familias en Acción), focuses on the household by
design. Since the CMPI is aimed to be a policy instrument to track multidimensional

2
Although the term household is not equivalent to the term family, in Colombia approximately 82 % of
households are made up of members of the same family, 60 % of households correspond to nuclear families
and 22 % to extended families.

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poverty, defining household as its unit of analysis allow different policy interventions to
use the CMPI as a measure to track their effectiveness.
In Colombia, households are considered the units that respond to difficult situations.
Empirical evidence indicates that households show solidarity and work together in order to
overcome negative shocks or adverse events, particularly homes made up of extended
family members. Mision Social (2002) found that within the city limits, the 1990’s crisis
led to the disintegration of poor bi-parental nuclear households, which then changed into
extended mono-parental households. On the other hand, households respond to difficult
situations by implementing a combination of actions that involve different members. In
poor households, this strategy is generally linked with poverty traps. In that regard, the
Mision Social (2002) found that during the 1990s financial crisis, the critical event with the
highest impact on households was unemployment of the household’s head, while the main
recovery strategy was the entry of the spouse and children into the labour market.
In Colombia, the family is recognized as the basic institution of society. In particular,
the Colombian Political Constitution recognizes the family as ‘‘society’s basic institution’’
and concedes joint responsibility between the family, society and the state in ensuring the
population’s living conditions and rights—specifically, decent living conditions for chil-
dren and senior citizens, and essential aspects such as education. Some examples from the
Constitution, related to the protection of children, senior citizens and education are as
follows: ‘‘The family, society and the state are under the obligation of assisting and
protecting children in order to guarantee their harmonious and comprehensive develop-
ment, and their rights’’ (Art. 44). ‘‘The state, society and the family will concur in order to
protect and assist senior citizens, and promote their active integration in the community’’
(Art. 46). ‘‘The state, society and the family are responsible for the education, which will
be compulsory between the ages five to fifteen’’ (Art. 67).
Comparability with monetary poverty measures. A household-based multidimensional
poverty measure is arguably more consistent with the widely applied Foster et al. (1984)
monetary measures, well known as the FGT family of poverty measures. The FGT mea-
sures are the most commonly used one-dimensional poverty metrics based on income,
expenditure or consumption. Since the FGT poverty measures almost always use house-
hold-based measures, it is also easier to compare the CMPI against them.

2.3 Why the AF Methodology?

The AF method has a number of distinct advantages for the formulation and monitoring of
public policy.
Clarity. The methodology is simple and easily understood by non-specialists, including
policy-makers and the general public.
Allows the inclusion of quality-of-life dimensions and indicators relevant for the society
and sensitive to public policy implementation. The AF methodology allows for the in-
clusion of dimensions which society deem to be particularly important or desirable at a
point in time, which are alterable via social policy, or which reflect the main objectives of
said social policy. Once the dimensions are chosen, the methodology allows for selecting
indicators that reflect direct actions from public policy aimed at reducing poverty.
Monitoring the efficacy of public policy. The sum of the above-mentioned attributes plus
their ability to be decomposed by the contribution of each dimension and/or population
subgroups allow for the AF methodology to be used as an instrument for monitoring public
policy actions aimed at reducing poverty. The clarity of the multidimensional notion of
poverty expressed by the index is transmitted to the multi-sector discussion about design

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and strategic planning for the reduction of poverty. When the government is tracking the
behaviour of all dimensions and indicators included in the CMPI, it is possible to deter-
mine which dimensions and indicators register the highest deprivation rates among the
poor and also which dimensions show relatively less improvement among poor households
over time. Finally, if the dimensions in any way reflect social priorities, and the indicators
have been selected in order to monitor public policy actions, these warnings will either
signal failures in policy execution or point out the need for them to be strengthened and
redesigned. A poverty measure based on income or expenditure makes accountability
difficult, given that it is expressed in terms of one single variable. In addition, account-
ability is difficult in the case of an index that does not allow decomposability.
Multidimensional poverty profiles comparable with unidimensional poverty profiles.
The AF methodology is based on the FGT indicators and adapted to the multidimensional
space. It uses an explicit axiomatic property structure, as defined for the one-dimensional
poverty measures by Sen (1976), to produce a family of multidimensional poverty mea-
sures that are directly comparable with the analogous FGT indicators. The ability to
compare multidimensional measures of poverty with unidimensional income-based
poverty measures has important advantages to evaluate and monitor policies.

2.4 Identification of the Poor Population

Within the literature on multidimensional poverty measurement, there are four recognized
types of methods for the identification of multidimensionally poor people: (1) the unidi-
mensional method; (2) the union approach; (3) the intersection approach; and (4) the dual
cut-off point approach, which corresponds to the Alkire–Foster proposed identification
method.
The unidimensional method aggregates the achievements of different dimensions into a
single quality-of-life index and uses an aggregated cut-off point to identify the poor
population. The LCI, for example, aggregates achievements of the different indicators to
be included in one synthetic index. In its first version, the LCI was conceived as a living
standards index rather than a deprivation index. As a result, the index did not use any cut-
off point to differentiate poor from non-poor population (Cortés et al. 1999a, 2000;
González and Sarmiento 1998). A later version of this index, however, developed an
aggregated cut-off point to differentiate the poor from the non-poor population. It is
important to note that this latter LCI is unidimensional both in the sense that it uses one
aggregated index to rank households from worse off to better off living conditions, and in
the sense that it uses one aggregated cut-off point to identify the multidimensionally poor
people. As was pointed out by Alkire and Foster (2011a), the unidimensional method to
identify multidimensionally poor people does not satisfy some of the axiomatic properties
presented later in this paper as desirable for the measurement of multidimensional poverty.
On the other hand, the union approach considers a household to be multidimensionally
poor if it is deprived in at least one dimension. This is the method that the Unmet Basic
Needs Index uses for the identification of the poor. One of the limitations of this approach
is that it may incorrectly identify some households as poor, given that deprivation in one
dimension may be due to reasons unrelated to poverty, such as behavioural exceptions (for
example, a household deciding, of his own free will, to live in a house built with austere
materials, regardless of a generally good living conditions, or high level of education or
formal employment of its household members).
The third method is the intersection approach. This method identifies a household as
poor if it is deprived in all of the indicator dimensions. This approach is too strict and

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therefore identifies only a very small part of the population. As an example, in large cities
in Colombia, where household utilities coverage reaches almost 100 %, the intersection
approach would underestimate poverty by determining that almost no one is poor.
The AF identification method uses a dual cut-off point approach. The first cut-off,
defined separately for every indicator, determines whether a household is deprived in each
indicator. The number of deprivations that any i household face ðCi Þ is then calculated
using appropriate weights. The second cut-off is the weighted sum of deprivations k above
which a household is considered multidimensionally poor. There is no deterministic
method for the definition of the parameter k. The dual cut-off approach includes, as
particular solutions, the union approach ðCi [ 0Þ and the intersection approach ðCi ¼ 1Þ.
In Sect. 2.10, we further discuss the selected k threshold for the CMPI and the reasons
behind that selection.

2.5 Aggregation

We use the aggregation method proposed by the AF methodology. Consequently, the


measures that we use are the following:
• Headcount ratio ðHÞ The headcount ratio or multidimensional poverty incidence rate is
defined as H ¼ q=n, where q is the number of people suffering a deprivation share of at
least k, and n is the total population.
• Adjusted headcount ratio ðM0Þ The adjusted headcount ratio combines information on
the number of multidimensionally poor people and the breadth of deprivation.
M0 ¼ HA, where A is the average deprivation share among the poor.
• Adjusted poverty gap ðM1Þ The adjusted poverty gap adds in information about the
depth of poverty (how far multidimensionally poor households are from ceasing to be
so). M1 ¼ HAG, where G is the average poverty gap between each household’s score
on a dimension, and the cut-off point for that dimension, across all indicators where
poor households are deprived. The poverty gap identifies the distance between each
dimension’s cut-off point and the achievement of the poor population in the dimensions
in which they are deprived. For the case of Colombia, the distance is based on the
proportion of household members that face deprivation in each of the indicators. For
example, the cut-off point for the health insurance indicator, explained below, is 100 %
of household members with health insurance. In a poor household where only 80 % of
its members have health insurance, the gap is given by ð100  80 %Þ=100 % ¼ 20 %.
The gap is censored at zero, that is, people who are not multidimensionally poor do not
contribute to the calculation of G.
• Severity ðM2Þ The severity measure assigns a higher weight to deeper deprivations of
poor households; in other words, it emphasizes households that are severely deprived.
By including the squared normalized gaps of the poor, the measure provides
information on the incidence, range and severity of multidimensional poverty.
M2 ¼ HAS, where S refers to the average of the squared normalized gaps.

2.6 Advantages in Properties

The AF methodology produces a family of multidimensional poverty indices, some of


which satisfy the axiomatic properties proposed by Sen (1976, 1979) as desirable for any
poverty measure. These properties were the basis for the Foster et al. (1984) proposed
measures. The AF methodology builds upon previous multidimensional analysis, such as

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the ones proposed by Tsui (2002), Atkinson (2003), and Bourguignon and Chakravarty
(2003). It is also based on the axiomatic structure by Pattanaik and Xu (1990), which is
defined for individual freedoms.
One of the advantages of using the AF methodology for the CMPI, in comparison with
previous multidimensional measures, is that it fulfils of a number of axiomatic properties
that other measures do not fulfil. These properties make the CMPI more suitable than
previous Colombian multidimensional indices for poverty comparisons across time, geo-
graphical areas, dimensions and population subgroups. We describe in this section those
axiomatic advantages of our proposed CMPI against previous Colombian multidimen-
sional indices. A full characterization of the properties of the AF methodology and their
presence across members of the family of measures can be found in Alkire and Foster
(2011a).
The first advantage of the CMPI aggregated indices is that they are not sensitive to
changes within a non-deprived dimension: that is, if a household which is not deprived in a
particular dimension receives a higher score in that dimension, none of the indicators
change. This is in contrast to the LCI and SISBEN, which when used as poverty measures
use the one-dimensional identification of the poor approach. Both indices are sensitive to
changes across both deprived and non-deprived dimensions, and therefore, neither the LCI
nor the SISBEN satisfy the deprivation focus desirable poverty measurement property
proposed by Alkire and Foster (2011a).
In addition, the CMPI is not sensitive to transfers between non-poor individuals. The
construction of the index does not produce lower levels of poverty due to changes among
the non-poor population. Thus, the CMPI fulfils the poverty focus axiom. By contrast,
when LCI and SISBEN averages are applied to a subgroup (as is generally the case), the
measurement is sensitive to changes in the living conditions of the non-poor.
Also, three of the four measures we use (M0, M1 and M2) satisfy the dimensional
monotonicity axiom. If a poor household faces a new deprivation that was not previously
suffered, a higher level of poverty will be recorded. Thus, these measures provide not only
information about how many people lie below the poverty line, but also how poor they are
in terms of the breadth of deprivation. The UBN, LCI and SISBEN do not satisfy the
dimensional monotonicity axiom, and they do not reflect the breadth of deprivation.
Moreover, two members of the family (M1 and M2), are not only sensitive to the
number of deprivations suffered by poor people, but also to the size of the need in each of
the deprived dimensions. These poverty measures show greater poverty whenever a poor
individual suffers an increase in the depth of deprivation in any of the dimensions in which
he or she is deprived. This refers to the weak monotonicity axiom and the monotonicity
axiom. In the UBN, by contrast, changes (increments/reductions) in the level of any
indicator do not necessarily produce changes (increments/reductions) in the aggregated
score.
Finally, all the four measures that we use are decomposable, which allow the govern-
ment to track poverty across different geographical areas and by thematic sectors, making
it possible to determine the contribution of each one to the overall societal measure. This is
the case of neither the SISBEN nor the LCI.

2.7 The Evaluative Space

According to the purpose of the measure to build and its empirical restrictions, the use of
the AF methodology leads to a notion of multidimensional poverty that can be adapted to
different evaluative spaces (Alkire and Foster 2011b). In fact, Alkire and Foster (2011b)

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recognize the flexibility of their AF method to contribute to public policy orientation: ‘‘Our
methodology is perhaps best seen as a general framework for measuring multidimensional
poverty since many key decisions are left to the user. ð. . .Þ We note that this flexibility
makes it particularly useful for measurement efforts at the country level where these
decisions can fit the purpose of the measure and can embody normative judgements re-
garding what it means to be poor’’ (Alkire and Foster 2011b, pp. 290–291).
In particular, the CMPI’s evaluative space within which to select dimensions and
indicators is defined by the set of thematic decisions and value judgements that constitute
the index. Specifically, the CMPI embodies a standard of living notion that considers
household deprivations as constitutive elements to describe the lack of a minimum stan-
dard of living. These living standard objects can be considered as the most valuated and
relevant in the Colombian context.
However, because of information limitations, we cannot avoid describing living con-
ditions through indicators of ‘‘input’’, rather than only through indicators of ‘‘outcome’’.
Neither the Colombian LSMS nor other Colombian household surveys allow all quality of
life dimensions to be measured in full through outcomes. We, therefore, acknowledge that
the CMPI’s approach to measure the Colombia’s standard of living might still be inac-
curate, as it uses in some cases, input indicators instead of living standard outcomes.
The standard of living notion expressed by the CMPI is represented by dimensions and
indicators of quality of life, which summarize the social policy priorities of the government
and the national social agreements. Besides its standard of living nature, the CMPI’s
evaluative space involves public policy concerns such as the selection of indicators that can
be goals of public policy and that lead to a clear accountability. We follow describing in
Sect. 2.8 the selected dimensions and indicators that are proposed to constitute the CMPI
and the empirical and normative criteria used to select them.

2.8 Dimensions and Indicators

For the CMPI proposed here, the strategies described below were followed in the process
of defining dimensions, indicators and cut-off points (the result of this exercise is shown in
Table 1):
• A review of frequently used indicators from other indices applied to Latin America.
The Human Development Index, the Human Poverty Index, the Subjective Conditions
Index, CEPAL’s Social Cohesion Index, the World Bank’s Human Opportunity Index,
and Oxford University’s Dissimilarity Index were reviewed, among others.
• A review of the literature with regard to: (1) key dimensions and indicators often used
in multidimensional indices applied to Colombia (UNB, LCI, SISBEN III); (2)
priorities established by the Constitution of Colombia; (3) relevant variables raised by
the study of Voices of the Poor for Colombia; (4) the thresholds set by the Millennium
Development Goals (MDGs Colombia) and by the respective public policy sector. The
comparative result of this review can be accessed upon request.
• The government’s social policy. The indicators were selected in such a way that all of
them are susceptible to modification by public policy.
• Availability of data within a single source, that is within the Living Standards
Measurement Surveys of the Colombian National Statistics Department.
• Discussions with experts and sector heads.

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Table 1 Dimension and indicators for CMPI


Dimension Indicator label Indicator definition Cutoff point

Household Educational Average education level for people 15 and older 9 years
education achievement living in a household
conditions (0.1)
(0.2) Literacy Percentage of people living in a household 15 and 100 %
(0.1) older who know how to read and write
Childhood and School attendance Percentage of children between the ages of 6 and 100 %
youth (0.05) 16 in the household that attend school
conditions No school lag Percentage of children and youths (7–17 years old) 100 %
(0.2) (0.05) within the household that are not suffering from
school lag (according to the national norm)
Access to childcare Percentage of children between the ages of 0 and 5 100 %
services in the household who simultaneously have
(0.05) access to health, nutrition and education
Children not working Percentage of children between 12 and 17 years 100 %
(0.05) old in the household that are not working
Employment No one in long-term Percentage of a household’s EAP that is not facing 100 %
(0.2) unemployment long-term unemployment (more than 12 months)
(0.1)
Formal employment Percentage of a household’s EAP that is employed 100 %
(0.1) and affiliated with a pension fund (formality
proxy)
Health Health insurance Percentage of household members over the age of 100 %
(0.2) (0.1) 5 that are insured by the Social Security Health
System
Access to health Percentage of people within the household that has 100 %
services access to a health institution in case of need
(0.1)
Access to public Access to water source Urban households are considered deprived if 1
utilities and (0.04) lacking connection to public water systems.
housing Rural households are considered deprived when
conditions the water used for the preparation of food is
(0.2) obtained from wells, rainwater, spring sources,
water tanks, water carriers or other sources
Adequate elimination Urban households are considered deprived if they 1
of sewer waste lack a public sewer system. Rural households are
(0.04) considered deprived if they use a toilet without a
sewer connection, a latrine or simply do not have
a sewage system
Adequate floors Households with dirt floors are considered 1
(0.04) deprived
Adequate external An urban household is considered deprived when 1
walls the exterior walls are built of untreated wood,
(0.04) boards, planks, guadua or other vegetation, zinc,
cloth, cardboard, waste material or when no
exterior walls exist. A rural household is
considered deprived when exterior walls are
built of guadua or other vegetation, zinc, cloth,
cardboard, waste materials or if no exterior walls
exist
No critical Number of people sleeping per room, excluding Three persons
overcrowding the kitchen, bathroom and garage per rooma
(0.04)

Source: National Planning Department (NPD), Social Development Unit (SDU), Social Promotion and
Quality of Life Division (SPQLD). 2011. Notes: The weight assigned to each dimension and indicator is
shown in parenthesis
a
Urban: Three or more people per room; rural: more than three people per room

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• Sample precision of the selected indicators. Once the indicators were defined, an
analysis was made to determine the sample precision for each of the study’s domains,
and only those with a coefficient of variation ðcvÞ3 below 15 % were selected.
As a result of this process, five dimensions were selected (household education conditions,
childhood and youth conditions, health, employment and access to household utilities, and
living conditions). These five dimensions are measured using 15 indicators. We proceed to
describe them below.

2.8.1 Dimension of Household Education Conditions

Educational achievement The indicator is measured by the average level of education for
individuals 15 years of age and older within the household. However, it is worth noting
that if a household member selects preschool as the highest level of education approved,
zero years of schooling is assigned to such a member.
In terms of the cut-off point used by this indicator, a household is considered deprived
when the average years of schooling of its members aged 15 and over are below nine.4
However, when there are no household members 15 years of age or older within the
household, the household is automatically considered as deprived in terms of educational
achievement.
Literacy This indicator is defined as the percentage of people aged 15 or above in the
household that know how to read and write. A household is considered deprived if at least
one of the household members aged 15 or older does not know how to read or write (i.e.
\100 % of its members 15 years old and over are able to read and write). When there are
no household members 15 years old or over, the household is considered deprived.

2.8.2 Dimension of Childhood and Youth Conditions

School attendance The indicator is calculated as the proportion of school-age children (6–
16 years old) in a household who attend an educational institution. According to this
indicator, a household is considered deprived if at least one of the children between 6 and
16 years old do not attend school (i.e. \100 % of children 6–16 years old are attending
school). Households with no children between 6 and 16 years old are not considered
deprived in this indicator.
No school lag School lag is calculated for the households with children between the
ages of 7 and 17. The school lag of each child is defined as the difference between the
number of legally expected years of schooling by specific age and the number of school
years completed in fact. The legally expected years of schooling by age are defined by the
Sector Plan for Education 2006–2010, presented by the National Ministry of Education;
children that are 7 years old are expected to have completed 1 year of education; 8 year

3
The coefficient of variation ðcvÞ is defined as the ratio of the standard deviation obtained from sample to
the mean cv ¼ r=l. This measure is also known as the relative standard deviation and shows the extent of
variation of a measure in relation to the population mean. According to 2008 DANE guidelines, the cv
‘‘measures the ...variability of the estimator’s sampling distribution, that is, it indicates the accuracy with
which universe characteristics are being estimated.’’ For the LSMS case, DANE considers that an estimate is
accurate if the cv\7 %, has acceptable accuracy if 7 %\cv\15 %, has regular accuracy if
15 %  ve  20 %, and finally, the estimate is inaccurate if cv [ 20 %.
4
The cut-off point was determined according to the Sector Plan for Education 2006–2007, presented by the
National Ministry of Education, and the basic competencies acquired by an individual in primary school
(1st–5th grades) and secondary school (6th–9th grades) that are required to have a decent job.

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old children are expected to have completed 2 years of education; 9 year old children are
expected to have completed 3 years of education, and this pattern continues until 17 year
old children are expected to have completed at least 11 years of education.
A household is considered as deprived in this indicator if any of the children between 7
and 17 years are lagging in school. In other words, the desired result is 100 % of children
in a household without school lag. Households with no children between 7 and 17 years
old are not deprived in this indicator.
Access to childcare services This indicator provides the percentage of children
0–5 years old in each household who have access to childcare services (health, proper
nutrition, and adult supervision or education) simultaneously. A household is considered to
be deprived in access to childcare services if there is at least one child between 0 and
5 years old with no simultaneous access to all childcare services. Thus, a household is not
deprived if its children under the age of 5: (1) spend most of the week at a community
home, nursery or preschool, or they are under the care of a responsible adult;5 (2) are
covered by health insurance; and (3) receive lunch in the care facility where they spend
most of time (as, for instance, community home, nursery or preschool).6
Children not working According to the International Labour Organization (ILO)7 and
the Colombian National statistical Department (DANE), child labour refers to children
under 18 years old that carry out household chores for more than 15 h per week, children
under 14 years old classified as employed, and children under 18 years old involved in
hazardous work.8 In the case of the CMPI and given the data constraints of the LSMS, the
CMPI only includes the percentage of children in the household between 12 and 17 who
are employed. The indicator of children not working is defined as the percentage of
children who are out of the labour market. A household is deprived in this indicator if at
least one child between 12 and 17 years old is employed. A household with no children
between 12 and 17 years old is considered not deprived.

2.8.3 Dimension of Employment

Absence of long-term unemployment This indicator measures the percentage of the eco-
nomically active population (EAP)9 in the household that has been unemployed for more

5
A child is considered under the care of a responsible adult if (1) he/she remains at home under the care of
father or mother, (2) is under the care of a relative, (3) is under the care of a nanny or maid, or (4) is under
the care of neighbours or friends. The last two categories of care were defined as responsible adult because
there is no evidence that indicates inadequate care in those cases. Being under the care of a nanny is
considered adequate, and since it is not possible to separate the responsibilities of the maid from those of a
nanny, the whole option is considered adequate. On the other hand, the ages of friends and neighbours are
unknown is not sufficient to determine deprivation. A child that (1) is taken to work by a parent, (2) remains
home alone, or (3) remains under the care of other minors younger than him is considered to be under
inadequate care.
6
Due to a lack of information, it is assumed that children under the care of a responsible adult receive
adequate nutrition.
7
See ILO convention No. 138 on the minimum age for admission to employments and work and ILO
convention No. 182 on the worst forms of child labour, 1999.
8
The definition of hazardous work varies from country to country, as well as among sectors within
countries. According to the World Health Organization, for example, what makes child labour hazardous is
the presence of hazards and risks at the workplace (such as the presence of chemicals, noise, ergonomic risks
like lifting heavy loads, etc.) and working conditions (long hours, night work, harassment).
9
The economically active population in this case is made by household members 12 years old and over
who are either employed or actively seeking employment (unemployed).

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than 12 months. The indicator is calculated as: 1  ðlong term unemployed=EAPÞ. A


household where there is at least one person in long-term unemployment is considered to
be in deprivation. Households with no economically active population are considered
deprived in this indicator, with the exception of households made up of people living on a
pension.
Formal employment This indicator takes the proportion of the economically active
population within the household that is employed and actively affiliated to a pension fund
(employees affiliated to a pension fund/EAP), where affiliation to a pension fund is taken as
a proxy of formality. A household is considered deprived when less than 100 % of the EAP
has formal employment. This indicator also captures unemployment. For this reason, the
long-term unemployed population is removed from the denominator in order to avoid
counting them in deprivation twice. Children under the age of 18 who hold jobs are also
eliminated in order to be congruent with the non-child employment policy.10 Households
with no EAP are considered deprived.

2.8.4 Dimension of Health

Health insurance coverage Health insurance coverage is defined as the proportion of


household members covered by the Social Security Health System.11 A household is
deprived if any of its members is not affiliated with a health insurance regime. Given that
the access-to-childcare-services indicator takes into account the health insurance status of
children between 0 and 5 years old, this indicator is measured only for the population older
than five.
Access to health services in case of need This indicator measures the proportion of
people in a household who have access to health services in case of need. A household is
not deprived in access to healthcare services if all of its members who in the last 30 days
have suffered an illness, an accident, dental problems or any other health issues that have
not required hospitalization, have been attended by a doctor, specialist, dentist, therapist or
health institution. Households where no one has had a need for healthcare services are not
considered to be deprived in this indicator.

2.8.5 Dimension of Access to Public Utilities and Living Conditions

It is worth noting here that the indicators that belong to this particular dimension are
naturally measured at the household level, meaning that each indicator is equally defined
across all the household members. This particular issue arises since household members
share the available amenities at the dwelling. This feature is fully concordant, then, with
the above-mentioned indicators that were defined at the household level as well.

10
It is a contradiction to determine that a child is deprived when employed and at the same time that he/she
is deprived if unemployed or actively seeking employment. The objective of the policy for elimination of
child labour is for children to be excluded from the job market and, therefore, not classified as employed or
unemployed.
11
It includes any type of health insurance regime, namely contributory regime, subsidized regime or special
regimes. Contributory Regime: for those with sufficient income and/or are formally employed, whose
affiliation is subject to a monthly contribution of 12.5 % of their income. Subsidized Regime: for the poor
population without payment capacity, identified with SISBEN instrument. Special Regimes: for people who
have or had a labour relation with ECOPETROL (national petroleum company), the armed forces, the
national police, the National Teaching Fund and public universities.

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Access to improved drinking water This indicator was defined using WHO-UNICEF
guidelines provided by the Joint Monitoring Programme (JMP) for water and sanitation
(WHO and UNICEF 2010). The JMP stablishes a set of world-wide drinking-water and
sanitation categories to determine improved drinking water sources and improved sewer
systems. The categories, however, used in each country correspond to the national cir-
cumstances. In particular, for the Colombian case, urban households are considered de-
prived when they have no access to public water services. In rural areas, households are
considered deprived when they have no access to public water services, and the water used
to prepare food is obtained from a well, rainwater, a river, spring water source, public tap
or standpipe, water truck, water carrier or any other source other than piped water.
Adequate elimination of sewer waste In this case, urban households without access to a
public sewer system are considered deprived. Rural households are considered deprived if
they have a toilet without a sewer connection, a latrine or if they simply do not have a
toilet.
Adequate floors Households with dirt floors are considered deprived.
Adequate exterior walls An urban household is considered deprived when the exterior
walls are built with untreated wood, boards, planks, guadua (a type of bamboo) or other
vegetation, zinc, cloth, cardboard, waste material or when no exterior walls exist. A rural
household is considered deprived when exterior walls are built of guadua or other
vegetation, zinc, cloth, cardboard, waste materials or if no exterior walls exist.
No critical overcrowding An urban household is considered critically overcrowded, and
therefore deprived, when the number of people sleeping per room (excluding kitchen,
bathroom and garage) is greater than or equal to three; a rural household is considered
deprived when the number is more than three people per room.

2.9 Weighting Structure

There is no definitive procedure of assigning weights over dimensions in a multidimen-


sional measure of poverty. Several methods exist to assign weights to the dimensions that
make up a multidimensional index. For instance, Decancq and Lugo (2013) identify three
different types of methods to assign weights: (1) data driven (obtained from the same data
used descriptively or statistically), (2) normative, and (3) hybrid. However, there is no
consensus on the weighting scheme that should be used; therefore, weight selection is
completely in the hands of the researcher.
For the CMPI, one normative approach and two data driven sets of weights were tested.
The first data-driven approach that was tested assigned an equal weight to each dimension,
and the weight received by the indicators within them was set according to the households’
deprivation rates in each indicator, which gave a higher weight to indicators with high
deprivation rates. On the contrary, the second data-driven set of weights assigned weights
to each dimension, as well as for each indicator within the dimensions, according to the
deprivation rates. These two approaches, and data-driven methods in general, face a
constraint: the moment in time when the weights are calculated. As an example, for the
case of Colombia, if weights were set according to households’ deprivations in 1997, a
high weight would have been assigned to the health insurance indicator; whereas today,
this indicator has relatively moderate deprivation rates, and in the coming years it will drop
even more. Therefore, one of the disadvantages of data-driven methods is that weights
change over time, while with a normative method’s weights remain constant. When
weights change for each measure, it is impossible to compare indexes over time.

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Consequently, the CMPI uses a normative approach with a nested weighting structure,
where each dimension has the same weight (0.2) and each indicator has the same weight
within each dimension. Note that the weights are chosen to sum to one and to express the
relative importance of each indicator in the overall index. Under this approach, all di-
mensions carry the same weight, indicating that they are equally important in terms of
quality of life of the population. However, since each dimension is measured by a different
number of indicators, and within each dimension the indicators are equally weighted, the
15 indicators thought the overall index do not have the same relative importance. This can
be seen in Table 1, which presents in parenthesis the weight assigned to each dimension
and indicator. In the dimensions with more indicators, each indicator has less weight than
the indicators that belong to dimensions captured by fewer indicators. Therefore, one of the
limitations of this approach is that the weight assigned to indicators within dimensions that
have many indicators is lower in comparison to that of the indicators within dimensions
that have few indicators. This limitation, however, is lessened if the indicators chosen are a
good expression of the dimensions they represent, considering that the dimensions do
weigh the same. On the contrary, in hypothetical cases where all indicators carry the same
weight, a higher percentage would be assigned to dimensions with a greater number of
indicators.
As a result, this nested weighting structure that the CMPI uses was established based on
the following points: (1) the equal weight assigned to each dimension reflects their equal
importance as constituents of quality of life; (2) in the debate among experts, this was the
option on which there was greater agreement; (3) although the weighting structure should
ideally take into account correlations between indicators, there is still no well-established
way to implement this without compromising some of the indicator’s other properties, ‘‘. . .
nor has it even been established that the potential interrelationships must be reflected in an
overarching methodology for evaluating multidimensional poverty. Instead, the intercon-
nections might be the subject of separate empirical investigations that supplement, but are
not necessarily part of, poverty measurement’’ (Alkire and Foster 2011a).

2.10 Selecting the Value of k

As with any other poverty measure, poverty levels vary according to the threshold selected;
lower poverty thresholds produce lower poverty rates, and higher thresholds produce
higher poverty rates. In general, for the AF methodology and specifically for the CMPI, the
k-threshold to identify the poor and non-poor populations represents the minimum
weighted sum of indicators in which a household is deprived, in order to be identified as
poor. Note that household deprivation indicators take values of one and zero, where one
refers to presence of deprivation and zero refers to the absence of it. The aforementioned,
in Sect. 2.4, weighted sum of deprivations ðCi Þ is obtained from aggregating those f0; 1g
deprivation indicators, while using the correspondent weighting structure. As a result, Ci
varies from zero to one, where zero implies there is no indicator in deprivation for the i-
household, and one implies that all are indicators in deprivation. Since the cut-off point k is
the minimum weighted deprivation share that a household must have to be considered as
poor, k may potentially take any value from 0 % (every household is automatically poor) to
100 % (no household is ever poor).
As previously mentioned, there is no deterministic method for choosing this second cut-
off point, and in much of the analysis in this paper, we compare poverty estimates obtained
using the full range of k-thresholds. However, it is often necessary to generate a single

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estimate based on a selected value of k; this section outlines the process of making this
selection.
The first step towards defining an initial range of values for k was to discard those k-
thresholds that would produce ranges of poverty estimates which could not be captured by
the survey; at this stage, we excluded any possible k threshold that would produce poverty
indices with a cv greater than 15 % (H, M0, M1 and M2). This was done at the national
level and for each analysis domain.
In the case of H and M0, estimates with poor precision were observed for k values
greater than or equal to 40 %. By contrast, for M1 and M2, estimates with a cv greater than
15 % were observed for k starting at 45 %. Also taking into account minimum thresholds,
the set of k-values generating accurate estimates is the interval [7, 40 %], hereafter called
the robust band of k values, for the H and M0, and the interval ½9; 45 % for M1 and M2.
We supplement these statistical criteria with empirical evidence on the share of de-
privations faced by different groups. The average deprivation share across the whole
population in 2008 was 27 %. This varies according to a household’s experience of
poverty, measured both subjectively and via income-based measures, and across time.
Table 2 shows the average share of deprivations between 2003 and 2010 across these sub-
population groups. Households that do not identify themselves as poor and households that
are not income-poor face an average deprivation share of 21 %. In 2010, households that
defined themselves as poor, or poor by income, faced average deprivation shares of 31 and
33 %, respectively.
This indicates that a k threshold of 21 weighted sum of deprivations might be too low,
while 41 % would be too high. Within this range, we computed 95 % confidence intervals
for H and M0 for different values of k. For both H and M0, the confidence intervals overlap
for k ¼ 27 % and k ¼ 33 %, hence we infer the selection between these two values of k
could be indifferent. Given that overlapping of confidence intervals is not a definite
condition for concluding the existence of equal means, one may conclude that there may be
no significant statistical difference between the estimates of k ¼ 27 % and k ¼ 33 %.
This combination of statistical methods and empirical data suggests a value of k ¼ 33 %
for the overall threshold for all H and M0. We also review the values of k used in other
papers. We find that most use a value of k of around 30 %. For example, López Calva and
Ortiz Juárez (2009) uses a k of 2/6 and Alkire and Santos (2010) takes a k of 1=3

Table 2 Average share of deprivations, 2003–2010


Population subgroup Average share of deprivations

2003 (%) 2008 (%) 2010 (%)

Population where the household head perceives 37 33 31


the household as poor
Population below the (income) poverty line 40 35 33
Population where the household head perceives the household 41 37 35
as poor and beneath the poverty line
Population where the household head does not perceive 22 21 20
the household as poor
Population above the poverty line 25 21 21

Source: 2008 LSMS. Note: The subjective poverty measure is not available in the 1997 LSMS

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ð3:33=10Þ. Hence, our chosen k-threshold is very similar to the k threshold selected by
other authors in comparable contexts.

3 Empirical Results

This section presents estimates of multidimensional poverty for the selected k-threshold
ðk ¼ 33 %Þ across 1997, 2003, 2008 and 2010. We also use a simple k-dominance analysis
technique, which involves plotting estimated poverty rates for the years in question for all
possible choices of k, the poverty threshold. In this way, we are able to assess whether
estimated changes in poverty rates are observed only for certain values of k, or whether
they are robust to different assumptions about the k poverty threshold. In addition to
national-level estimates, we present urban/rural profiles.

3.1 A National Pattern of Multidimensional Poverty Reduction

Table 3 presents the multidimensional poverty results at k ¼ 33 %. Results indicate a re-


duction in the percentage of multidimensionally poor people ðHÞ between 1997 and 2010,
from 60.4 to 30.4 %, representing an absolute change of 30 % points or half of the 1997
level. Between 1997 and 2010, at our preferred threshold of k ¼ 33 %, M0 decreased from
0.29 to 0.13, indicating a reduction of around 55 % of the original level. This is similar in
magnitude to the reduction in the headcount ratio ðHÞ, but it is slightly larger. This
difference arises because both the number of multidimensionally poor people and the
proportions of deprivations experienced by the poor ðAÞ decreased over this period. On
average, the estimated percentage of deprivations among the poor population decreases by
around 5 % points during the period of analysis (from 48.3 % in 1997 to 43.2 % in 2010).
The estimates of the multidimensional poverty headcount ðHÞ and the adjusted head-
count ðM0Þ at the national level at any possible value of k are presented in Figs. 1 and 2.
One line is shown for each of the years 1997, 2003, 2008 and 2010. As expected, all lines
slope downwards, indicating that higher poverty thresholds yield lower levels of poverty.
This stands in contrast to the analogous result for income-based poverty measures, where a
higher poverty threshold would produce higher poverty rates; this occurs because k indi-
cates the percentage of possible deprivations above which people are defined as poor, and a
negative relationship is observed. Note that the scale on the vertical axis for M0 is different
to the scale for H because M0 is the A-adjusted version of H and therefore always lies
below H.

Table 3 Multidimensional poverty results for k ¼ 33 %. Total national, 1997–2010


1997 2003 2008 2010 2010–1997 2010–1997
(p.p.) reduction % reduction

Headcount ratio ðHÞ 60.4 % 49.2 % 34.7 % 30.4 % 30.0 49.6


Average deprivation share 48.3 % 46.5 % 44.8 % 43.2 % 5.2 10.7
among the poor ðAÞ
Adjusted headcount ratio ðM0Þ 0.29 0.23 0.16 0.13 0.16 55.02

Source: LSMS
Note: The percentage change represents the relative change between the old value and the new one

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Percentage of multidimensionally poor


100%

80%

population 60%

40%

Robust band
20% of k values

0%
7% 20% 33% 47% 60% 73% 87% 100%
k-threshold of multidimensional poverty

1997 2003 2008 2010

Fig. 1 Multidimensional poverty headcount ratio ðHÞ. 1997–2010, for different values of k.
Source: LSMS
Adjusted percentage of multidimensionally poor

0.5

0.4
population

0.3

0.2

0.1 Robust band of


k values

0.0
7% 20% 33% 47% 60% 73% 87% 100%
K-threshold of multidimensional poverty

1997 2003 2008 2010

Fig. 2 Adjusted headcount ratio ðM0Þ. 1997–2010, for different values of k.


Source: LSMS

The fact that in H the line for each year lies everywhere below the line for the earlier
year in the series indicates that headcount poverty in Colombia decreased continuously
between 1997 and 2010; this is robust to changes in the value of k. Likewise to the
headcount ratio, M0 decreased over the observed period, independent of the value of k.
Similar k-dominance analysis for the share of deprivations ðAÞ indicates that the changes
on A are also robust to the choice of k for all values in the robust band ð7\k\40 %Þ.

3.2 Health Dimension Leading the Changes

Table 4 shows the evolution of contribution of each dimension in the evaluated M0 at the
selected k ðk ¼ 33 %Þ. Across the four years, the dimension that contributes the most into
M0 corresponds to household education conditions. On average, across the 4 years, this

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Table 4 Dimensional contributions in M0 for k ¼ 33 %. Total national, 1997–2010


1997 2003 2008 2010 2010–1997
(%) (%) (%) (%) reduction (p.p.)

Household education conditions 28 30 32 34 5.3


Childhood and youth conditions 17 16 16 16 -0.6
Employment 24 24 25 26 1.2
Health 23 22 17 15 -7.4
Access to dwelling services 8 8 10 10 1.5

Source: LSMS

dimension explains 31 % of the adjusted multidimensional headcount. In contrast, access


to dwelling services is the dimension that least contributes to multidimensional poverty,
having an average across the four years of 9 %. The dimension that has contributed the
most in the reduction trend observed during 1997 to 2010 is health. Between 1997 and
2010, this dimension decreased its contribution by 7.4 % points. About two thirds of this
reduction occurred between 2003 and 2008, a period in which major improvements in
health insurance coverage were introduced. Figure 8 within the ‘‘Appendix’’ presents the
evolution of the rate of deprivation by indicators across 1997, 2003, 2008 and 2010.

3.3 The Urban/Rural Gap

In this section, we assess whether national reductions in multidimensional poverty were


experienced equally in urban and rural areas. Figure 9 on the ‘‘Appendix’’, present esti-
mated values of H for all values of k, with urban and rural areas plotted respectively. In
line with what other analysis has shown for the Colombian case, levels of poverty are
higher in rural areas than in urban areas. However, in both urban and rural areas, there are
clear reductions in multidimensional poverty rates over all values in the robust band of k.
Table 5 presents estimates of poverty rates in urban and rural areas at our selected
threshold k ¼ 33 %. The incidence of multidimensional poverty declined over time in both
urban and rural areas. In terms of percentage points, the drop was considerably larger in
rural areas than in urban areas (33pp vs 27pp); however, when reductions are expressed in
terms of a percentage of the original level, the reduction was substantially higher in urban
areas than in rural areas (54 vs. 38 %). This represents a significant reduction, as most of
Colombia’s population resides in urban areas (in 2010, close to 77 % of the population
lived in urban areas).
What does this mean in terms of rural/urban differences? The third row of Table 5
shows differences in poverty rates between rural and urban areas for each year and the
differences in the overall percentage point and percentage reductions. The fourth row
shows rural poverty rates as a multiple of urban poverty rates.
The magnitude of the gap between rural and urban poverty rates remains fairly stable
over the period, reducing from 35 % in 1997 to 30 % in 2010. This may suggest that rural
areas have benefited more than urban areas from improvements in living standards.
However, when we examine the ratio between rural and urban poverty rates, we see that
they have diverged: rural poverty rates were 1.7 times higher than urban poverty rates in
1997, but they were 2.3 times higher in 2010. This implies a steady widening of the rural/
urban gap within this period, and it suggests that rural populations have not benefited as
much as urban populations from improvements in coverage of public services.

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In fact, this effect is not driven solely by coverage in public services, as the same
widening of the rural/urban gap is observed in official estimates of income poverty. Here,
the same trend in poverty reduction from 2003 to 2010 may be observed in urban and rural
areas. Both, income poverty and multidimensional poverty, show faster reductions in urban
areas than in rural areas. According to DANE’s income poverty estimates, rural poverty
declined from 57 % in 2003 to 49 % in 2010 and from 45 to 33 % in urban areas, a drop in
12 % points in both rural and urban areas, but a much larger drop as a percentage of the
original levels in urban areas.
We now proceed to look at the range of deprivations experienced by the poor and how
this varies between urban and rural areas.
Rows (5) and (6) from Table 5 show the average deprivation share among the poor in
urban and rural areas, respectively. A higher average of deprivation is observed among the
poor living in rural areas than among those living in urban areas for every year of analysis and
for every value in the robust band of k (see Fig. 10 within the ‘‘Appendix’’). The intensity of
poverty decreases in both urban and rural areas over the period studied. Although the intensity
of poverty is higher throughout among the rural poor, the decrease between 1997 and 2010
was larger in rural areas than in urban areas, both in terms of percentage points (8pp vs 4pp)
and in terms of percentages of the original levels (14 vs 8 %).
We have seen that urban populations have benefited more than rural populations in
terms of reductions in poverty rates, while the urban poor have benefited more than the
rural poor in reductions in the intensity of deprivation. What does this mean for the
adjusted headcount ratio M0? Rows (7) and (8) from Table 5 present the estimates of M0 at
k ¼ 33 % for Urban and Rural areas. Also, Fig. 11 within the ‘‘Appendix’’ presents the
dominance analysis performed for M0 across every value of k for rural and urban areas.
Estimates of M0 show that reductions in poverty rates in urban areas dominate re-
ductions in poverty rates in rural areas. Although the percentage point decrease in M0 is
much larger in rural areas than in urban areas (0.21 vs 0.13), the reduction expressed as a
percentage of 1997 levels is lower in rural areas (47 % against 57 % in urban areas).

Table 5 Multidimensional poverty headcount ratio ðHÞ, average percentage of deprivations among the poor
population ðAÞ and adjusted headcount ratio M0. 1997–2010, for k ¼ 33 % across urban and rural areas
1997 2003 2008 2010 2010–1997 2010–1997
reduction (p.p.) % reduction

Multidimensional poverty headcount ratio (H)


(1) Urban 51 % 40 % 27 % 23 % 27.3 54
(2) Rural 86 % 77 % 60 % 53 % 32.9 38
(3) Rural/urban gap 35 % 33 % 33 % 30 % 5.6 16
(4) Rural/urban ratio 1.7 1.9 2.2 2.3
Average percentage of deprivations among the poor population (A)
(5) Urban 46 % 44 % 44 % 42 % 4 8
(6) Rural 52 % 50 % 46 % 45 % 8 14
Adjusted headcount ratio (M0)
(7) Urban 0.23 0.18 0.12 0.1 0.13 57
(8) Rural 0.45 0.39 0.28 0.24 0.21 47
(9) Rural/urban gap 0.22 0.21 0.16 0.14 0.08 10
(10) Rural/urban ratio 2.0 2.2 2.3 2.4

Source: LSMS 2008

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This may also be observed in the last row of Table 5, where rural poverty rates ex-
pressed as a percentage of urban poverty rates increase from 2.0 to 2.4 between 1997 and
2010. This again implies that rural populations have benefited less from social interven-
tions than urban populations, although the change is less stark than in H, showing the
ameliorating effect of changes to poverty intensity in rural areas.

3.4 Inequalities Among the Poor

In Sect. 2.5, we explained two measures that adjust for the depth of poverty:
M1 ¼ HAG, in which the headcount measure is adjusted by the average share of pos-
sible deprivations experienced by poor households ðAÞ and the average gap, over all the
indicators on which a household is deprived, between its achieved level and the poverty
threshold for that indicator ðGÞ.
M2 ¼ HAS, in which the headcount measure is adjusted here not only by A, but also by
the average squared poverty gap over all indicators and all poor people.
These two measures reflect the magnitude of the poverty gap among the poor, with M2
placing greater weight on the poorest people; they are particularly useful in that they offer
additional information on the magnitude of poverty, facilitating the targeting of social
policy.
In contrast to H and M0, M1 and M2 require cardinal information—that is, not just a
measure of whether an individual or a household meets a particular threshold, but by how
far it falls short of that threshold. The CMPI consists of household-level aggregates of (a)
individual-level categorical indicators for the first four dimensions and (b) household-level
indicators for the housing conditions dimension. All the indicators on the housing condi-
tions dimension take the value 0 or 1 and thus do not provide cardinality; these indicators
are therefore excluded from this analysis. However, the indicators over the other dimen-
sions are aggregated across all household members and thus may take a range of values
between 0 and 1. These values indicate the fraction of household members who do not
meet each target. Thus, they do not exactly represent the normalized gap between the
achievements of a household (or its individual members) and the deprivation threshold, as
strictly required for the calculation of M1. However, they do allow for the calculation of
statistics analogous to M1 and M2, which capture the degree of deprivation and the need at
the household level.
The poverty gap on each indicator for any i household ðgij Þ is calculated as the distance
between the proportion of eligible household members who face deprivation and the
threshold for each indicator (see Table 8 within the ‘‘Appendix’’ for the definition of the
gap for each indicator). Taking, for example, the formal employment indicator, which has a
cut-off point of 100 % of the household’s economically active population (EAP) holding
formal employment. This would mean that a household where 100 % of members hold an
informal job has a deeper deprivation than a household where only 10 % of its members
face this deprivation. Note, however that the proportion of ‘eligible’ household members
differ across indicators—for example, the school attendance indicator in the childhood and
youth dimension has a different number of eligible members (hence denominator of the
normalized gap) than the formal employment indicator.
The total household gap across indicators is calculated as the weighted average size12 of
all the gaps over all the indicators on which the household is deprived.

12
Weights are rearranged according to the number of indicators within each dimension.

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R. Angulo et al.

Finally, the mean gap over all deprived households is calculated. As the denominators
differ, the mean gap can be roughly interpreted as the (weighted) average proportion of the
eligible household members in each indicator who are actually deprived in the indicators.
Multiplying M0 by the mean gap will lead to a reduction in the value of the poverty measure in
all situations, except that in which all eligible household members are deprived in all di-
mensions (the mean gap is 100 %). Thus, in a sense the M1 corrects the M0 measure by
adjusting the adjusted headcount ratio even more precisely to reflect the true proportion of
individuals in Colombia who are poor, given intra-household differences. Note that care must
be exercised in interpreting the M1 and M2. The reason is that the values may change due to
differences in household size and composition. In areas in which all households are single
people, the mean gap will always be 100 %; as the size of households increases, the mean gap
is likely to be lower. This is the same if there was one versus many children.
Based on the same empirical techniques as outlined in Sect. 2.10, we select the value k ¼ 36 %
for the calculation of M1 and M2. Also, using the same statistical criteria as for the case of H
and M0, we find the robust band of k values, which is calculated as the interval [9, 45 %].
As for the poverty incidence measurements reported previously, we plot results for all
possible values of k, including those outside the robust range, as a dominance analysis
exercise. M1 and M2 are plotted in Figs. 3 and 4, for all values of k and for 4 years between
1997 and 2010. Out of all previous years for all value of k inside the robust band (and for most
values outside), 2010 dominates. As a result, we can assert that both the adjusted poverty gap
and severity decrease between 1997 and 2010, regardless of the selected k.
M1 and M2, calculated for the total national at k ¼ 36 %, are presented in Table 6, as
first and second row respectively. Both decrease substantially between 1997 and 2010; M1
decreases from 0.23 to 0.09, and M2 from 0.21 to 0.08. This is an important reduction, as it
implies that the households classified as poor are not only facing a lower proportion of
deprivations in Colombia, but also that the magnitude of their deprivations is lower. In
other words, the proportion of household members facing deprivations has decreased.
The last two columns of Table 8 indicate the decrease in M1 and M2 between the year
1997 and 2010. The decrease in the two indices is similar, both in terms of the magnitude
of the drop (0.14 and 0.12) and the percentage decrease (59 and 61 %). Comparing these
with the percentage reductions in H (50 %) and M0 (55 %), this suggests that a reduction
0.4
Robust band
of k values
Adjusted poverty gap

0.3

0.2

0.1

0.0
9% 18% 27% 36% 45% 55% 64% 73% 82% 91% 100%
k-threshold of muldimensional poverty

1997 2003 2008 2010

Fig. 3 Multidimensional poverty gap ðM1Þ for different values of k, 1997–2010.


Source: LSMS

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The Colombian Multidimensional Poverty Index: Measuring...

0.4
Robust band
of k values
0.3
Severiy

0.2

0.1

0.0
9% 18% 27% 36% 45% 55% 64% 73% 82% 91% 100%
k-threshold of muldimensional poverty

1997 2003 2008 2010

Fig. 4 Multidimensional poverty severity ðM2Þ for different values of k, 1997–2010.


Source: LSMS

Table 6 Multidimensional poverty gap ðM1Þ and severity ðM2Þ. Total national and by area. 1997–2010, for
k ¼ 36 %
1997 2003 2008 2010 2010–1997 2010–1997
reduction (p.p.) % reduction

Total national
(1) Gap (M1) 0.23 0.18 0.11 0.09 0.14 59
(2) Severity (M2) 0.21 0.16 0.1 0.08 0.12 61
Multidimensional poverty gap (M1) by area
(3) Urban 0.19 0.14 0.09 0.08 0.11 60
(4) Rural 0.34 0.28 0.18 0.15 0.19 56
(5) Rural/urban diff 0.15 0.14 0.09 0.07 0.08 4
(6) Rural/urban ratio 1.77 1.96 1.95 1.96
Multidimensional poverty severity (M2) by area
(7) Urban 0.17 0.12 0.08 0.07 0.10 61
(8) Rural 0.31 0.25 0.16 0.13 0.18 57
(9) Rural/urban diff 0.14 0.13 0.08 0.06 0.08 4
(10) Rural/urban ratio 1.84 2.04 2.04 2.03
Source: LSMS

in the intensity of poverty has accompanied a reduction in the incidence of poverty.


However, the percentage decreases in M1 and M2 are too similar to say with any confi-
dence that reductions in the intensity of poverty have been greater for the very poorest
people.
Tables 6 also show disaggregated M1 and M2 by urban and rural areas [Rows (3)–(10)].
The poorer living conditions of the rural population are once again evident, with both
measures being almost twice as high in rural as in urban areas. In both urban and rural
areas, M1 and M2 decreased between 1997 and 2010, and the magnitude of the decrease
was larger in rural areas. However, expressed as a percentage of the original levels, the
magnitude of the decrease was larger in urban areas. Looking at the rows (6) and (10) of
Table 6, this is reflected in an increase over time in the rural/urban poverty ratio: on both

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R. Angulo et al.

measures, it increases by about 0.2 over the period concerned. The comparable increases in
H and M0 are 0.6 and 0.4, respectively. This indicates that with whatever measure we use,
there has been increasing disadvantage for rural areas relative to urban areas. This increase
in urban/rural inequality is less marked when the depth and severity of poverty are taken
into account, and it indicates that some progress has been made in reducing the most severe
poverty in rural areas. However, the fact that urban/rural inequality is increasing on all
measures indicates that greater and better efforts are required in terms of targeting public
policy towards the rural poor.

3.5 Comparing Multidimensional, Income and Subjective Poverty

This section compares the percentage of poor and non-poor population according to the
CMPI and the income-based and subjective poverty measures. Figure 5 shows the distri-
bution of the national population across each category: both income poor and CMPI poor,
only CMPI poor, only income poor and non-poor by both criteria. It is worth noting that for
the case of multidimensional poverty, we use the figures produced with the selected k-
threshold of 33 %.
To result from reductions in incidence of both multidimensionally poverty and income
poverty, between 1997 and 2010, the proportion of population facing both multidimen-
sional and monetary poverty decreased in this period by almost 20 % points. While in
1997, 41 % of the population was both income and multidimensionally poor; in 2010, this
proportion reaches only 20 %.
We observe an increase in the percentage of the non-poor population by both measures.
While in 1997, 32 % of the population was neither income nor multidimensionally poor; in
2010, this proportion increased 17 % points, reaching 49 % of the Colombian population.
Between 1997 and 2010 the proportion of population differently classified by both
measures, multidimensional poverty and income poverty, has remained fairly stable around
29 %. However, while in 1997 the greater proportion of differently classified population
was mainly CMPI poor but income non-poor, in 2010 the greater proportion of this
population corresponds to income poor population. In other words, whereas the percentage
of the multidimensionally poor but non-income poor population decreased from 20 to
100%
90%
32%
Proporon of populaon

80% 37%
45% 49%
70%
60% 20% 14%
50% 9%
8% 10%
40% 14%
20%
30% 21%
20% 41% 36%
26%
10% 20%
0%
1997 2003 2008 2010

Poor both Only income poor Only CMPI poor Non-poor both

Fig. 5 Proportion of population by poverty category: multidimensional poverty and income-based poverty.
Source: LSMS

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The Colombian Multidimensional Poverty Index: Measuring...

100%
90% 23%
80% 39%
Proporon of populaon
43%
8%
70%
60%
28% 10%
50% 11%

40% 26%
27%
30%
20% 41%
10% 25% 20%
0%
2003 2008 2010

Poor both Only subjecve poor Only CMPI poor Non-poor both

Fig. 6 Proportion of population by poverty category: multidimensional poverty and subjective poverty.
Source: LSMS. Note: The subjective poverty measure is not available in the 1997 LSMS

10 % between 1997 and 2010, the percentage of multidimensionally non-poor that are
under the poverty line (poor by income) increased in this period from 8 to 21 %. These
results might imply that in spite of households experiencing better living conditions (e.g.
health, education, and housing conditions), income-generating programmes have not been
sufficient to increase the monetary resources at home.
When comparing subjective poverty with multidimensional poverty, we observe similar
results for the population being poor and non-poor by both measures. Between 2003 and
2010, the percentage of people that are multidimensionally poor and perceive themselves
as poor (subjective poverty) decreased from 41 to 20 %. The non-poor population by both
measures, on the other hand, increased from 23 to 43 %. For the remaining groups,
however, results were different from the comparison made above. As can be seen in Fig. 6,
the percentage of people multidimensionally non-poor that are subjectively poor remained
relatively constant in this period at around 27 %. The latter might probably indicate that
subjective poverty is more commonly associated with income than with living condition
indicators.

4 Policy Applications

The CMPI was developed as a tool for tracking the success of public policy. This section
outlines some of the ways in which it has been applied by Colombian government agen-
cies, and it also outlines other possible applications.

4.1 A National Index to Track Overall Poverty, Including Sectoral Goals

Given that the indicators included within the CMPI index have been selected on the basis
that they may be altered by public policy, the CMPI can be used to measure the
achievements of poverty reduction strategies set forth in the National Development Plan
(NDP). Thus, the Colombian government decided to include several targets derived from

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Table 7 Multidimensional poverty incidence (H) goal for the NDP


Measure 2008 (baseline) 2014 Difference

Headcount ratio (CMPI) 34.7 % 22.5 % 12:2 %


Absolute number of poor people by CMPI 15,421,703 10,701,692 -4,720,011
Absolute number of non-poor people by CMPI 29,029,444 36,960,095 7,930,651
Source: LSMS

the CMPI in its 2010–2014 NDP. Targets based on the headcount ratio are shown in
Table 7: for example, one goal was to decrease H from a baseline of 34.7–22.5 % by 2014.
Each government department set its own targets for improvement (see Table 9 in the
‘‘Appendix’’). Following this, the aggregate effect of these improvements was simulated
using the CMPI algorithm on the LSMS data, with a random assignment of improvements
over the poor population. The resulting counter-factual estimate of H became the overall
poverty target for the NDP; the target numbers of poor and non-poor people shown in
Table 7 are also the result of this exercise. Additionally, although the government’s CMPI
goal is expressed in terms of the headcount ratio ðHÞ, the same methodology also allows
for estimation of the adjusted headcount ratio ðM0Þ, the adjusted poverty gap ðM1Þ and the
multidimensional poverty severity ðM2Þ.

4.2 Micro-Simulations of the Effects of Public Policy

The direct relationship between the CMPI and the NDP offers additional advantages in
terms of policy design. One example is the possibility of estimating the cost of reducing
multidimensional poverty through different areas of social expenditure, as performed by
Conpes (2012). This is possible since there is precise budgetary information for the ac-
complishment of NDP goals. Another advantage is the possibility of measuring regional
achievements as components of progress towards the aggregate goal.
Also, the method of micro-data imputation may be used in the construction of counter-
factual scenarios to evaluate the effect of public policy on CMPI behaviour. For example,
the effect on multidimensional poverty from the implementation of a policy on a specific
dimension could be analysed. By inputting the microdata on the expected effect of the
policy on a specific dimension, while holding everything else constant, one may uncover
the impact of public policy on multidimensional poverty reduction in that dimension.
Similarly, it offers the possibility of analysing the effectiveness of the targeting of social
programs by simulating different achievements according to the targeting instrument.

4.3 Geographical Targeting

With the purpose of improving information on poverty at the municipal level in Colombia,
a CMPI proxy13 was constructed using Census data from 2005. New poverty maps for

13
Due to differences between the information available in the LSMS and the Census, some of the indicators
used to calculate the CMPI at the municipal level were adapted according to Census data 2005: (1) the long-
term unemployment indicator is replaced by the economic dependence rate, (2) a proxy for adequate
nutrition is constructed for the childcare indicator, which considers a household in deprivation if the child
did not receive any of the three basic meals one or more days of the previous week due to lack of money, and
(3) access to healthcare services refers to the previous 12 months.

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Colombia have been constructed from the information obtained, which have become a
source for geographic targeting. This information has been used for prioritizing investment
projects funded by transfers from the national level to the municipalities and was also used
for differentiating conditional transfers for the program ‘‘Mas Familias en Accion’’ across
regions.
Multidimensional Poverty Incidence ðHÞ at the municipal level is shown in Fig. 7. A
clear imbalance is seen between the urban and rural areas in terms of poverty and
quality of life. Urban areas have a lower percentage of multidimensionally poor people
than rural areas. Only 11 % of municipalities in Colombia have a headcount ratio of
less than 50 %. On the opposite side, 30 % of municipalities have an incidence of more
than 80 %.
Consequently, on average, a poor household in the central area faces fewer deprivations.
Households in most municipalities (60 %) suffer, on average, less than 50 % of all possible
deprivations. In only 6 % of municipalities do households suffer, on average, 60 % of all
possible deprivations.

4.4 Social Promotion of Families from the Extreme Poverty Reduction


Strategy—UNIDOS

The main strategy used by the Colombian government for the reduction of extreme poverty is
the UNIDOS safety net. It operates through the joint work of governmental agencies, mu-
nicipalities and families to promote income generation, wealth and improvement in life
conditions.

Fig. 7 Multidimensional poverty gap ðM1Þ and severity ðM2Þ for different values of k across
municipalities, 1997–2010

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In 2007, when the program began its operation, a household was eligible if it belonged
to the poorest 1,500,000 households according to the SISBEN score, or in case it was
catalogued as either a displaced or an indigenous household. After this first targeting
process, there were no more families included within the safety net. However, UNIDOS is
not a permanent program of support. Rather, it is dependent on a family’s living condi-
tions; therefore, once the situation of extreme poverty is resolved by the family, the
accompanying support ends. Consequently, nowadays the CMPI (specifically the head-
count ratio, H) is used to help in identifying current beneficiary households that are eligible
to be ‘‘promoted’’, that is, current UNIDOS families whose living conditions are suffi-
ciently favourable as to allow them to generate means of self-sufficiency without the
network’s support.
This promotion mechanism is done in two stages; firstly, the CMPI is used as a means of
geographical targeting of municipalities with potential families to be promoted. In this
matter, municipalities with potential families to be promoted are the ones that belong to the
2nd and 3rd quintiles of the municipal CMPI headcount ratio (as described in Sect. 4.3
above).
The second stage of the promotion mechanism occurs at the household level. Together
with a measure of income sufficiency, the CMPI is used to verify whether the family is not
in extreme poverty by income (whose income is below the extreme poverty line) or is
multidimensional poor ðk ¼ 33 %Þ. These settings satisfy the sufficient conditions for a
household to leave the program, although the necessary condition to be promoted from the
UNIDOS safety net is the fulfilment of the achievements prioritized by the household itself
in its Family Plan.

5 Possible Further Development of the CMPI

A number of unexplored topics arose from the exercise carried out for selecting the
CMPI dimensions, indicators and weights, as well as from the experience of presenting
the results and methodology in different seminars. This section includes a discussion of
such topics and improvements to consider for the near future regarding the design of
the CMPI.
In general terms, the possibility of including indicators to measure the quality of basic
services needs to be discussed. In countries like Colombia, where health services,
education and public utility coverage have greatly improved, there is a need for finding
new indicators that capture deprivation in those aspects, beyond coverage. In this way, the
inclusion of indicators on the quality of services is considered.
Indicators related to the quality of employment could offer more information on the
population’s living conditions. In the case of Colombia, place of employment, number of
working hours and type of contract were analysed as possible indicators to be included;
however, a consensus on the parameters for selecting of the cut-off point under which a
person is considered deprived was difficult to establish. There was, for example, difficulty
in establishing a direct relation between the 14 categories14 in the survey for place of
employment and the deprivation condition. On the other hand, these indicators have a

14
At a company or hired individual’s location, at a rented or own location, at home, in someone else’s
home, on the street, in a kiosk or stand, door to door, in a vehicle (taxi, car, bus, motorboat, boat), in a mine
or quarry, in a construction site, in a farm or land, owned, rented or crop shared, somewhere else (ocean or
river).

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strong correlation to formal employment; therefore, in the case of Colombia, these indi-
cators were excluded from the index in order to avoid capturing the same phenomena
thought several indicators and consequently producing duplication.
Other aspects, such as security, dignity and subjective and/or psychological well-being,
are frequently discussed as possible dimensions to be considered as part of the index. In the
report from the Commission on the Measurement of Economic Performance and Social
Progress CMEPSP (2009), presided over by Stiglitz, Sen and Fitoussi, for example, the
eight minimum dimensions that should be simultaneously considered to measure well-
being were the following: (1) material living standards (income, consumption and wealth),
(2) health, (3) education, (4) personal activities including work, (5) political voice and
governance, (6) social connections, (7) environmental conditions and (8) economic and
physical security.
It is worth noting that the possibility of including these aspects is limited to the
availability of information in the survey. Therefore, it is important to move toward the
inclusion of the required information in the survey used.
On the other hand, in relation to the weighting system, several approaches to set weights
in a multidimensional context exist. Although the current version of the CMPI already
compared three alternative weighting systems, other normative or hybrid approaches might
be worth exploring. This is the case of weighting structures that correspond to budget al-
location for each dimension, or weights determined according to revealed preferences.
Battiston et al. (2009) and Santos et al. (2010), for example, assigned weights based on the
Voices of the Poor study, in which the poor population was asked about their assessment of
different dimensions.

6 Concluding Remarks

This paper describes the elements and features that were used when designing the CMPI
launched by the Colombian government in August 2011. This paper also outlines public
policy applications for the index and describes the main results in terms of trends of
poverty rates within the whole country and across urban and rural areas. It is worth
highlighting that at the time of this paper’s writing, the CMPI was being used as public
policy tool in the Colombian context to track deprivations across the country, to monitor
public policies by sector and to design the poverty reduction goals of the 2010–2014
national development plan.
Multidimensional indices of poverty involve the selection of a parameter k, as a
threshold of deprivation. We selected values for this parameter based on statistical
criteria, empirical analysis and comparability with other work in the area; however,
our analysis included dominance techniques, which showed that our estimates were
robust to different choices of k. We find that multidimensional poverty in Colombia
decreased between 1997 and 2010, and this finding is robust over a wide range of
values of k.
Larger reductions in poverty were observed over the 5-year period between 2003 and
2008, compared to the preceding 5-year period between 1997 and 2003. This may be
explained by the large increase education coverage (at all levels), access to childcare
services and health insurance coverage between 2003 and 2008, which thus contributed to
a reduction in household deprivation rates, which is still ongoing.

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In contrast, the indicators that are most difficult to change quickly via public policy, and
consequently those that continue to show the greatest proportion of deprivation, are formal
employment and educational achievement for the population 15 and older. In 2010, 81 %
of households faced deprivation in formal employment. This means that in 81 % of
households, at least one employed member held an informal job. On the other hand, 55 %
of households faced deprivation from sufficient educational achievement for people 15 and
older; that is, in 55 % of households, the average educational achievement of people 15
and older was less than nine academic years.
The analysis of urban and rural areas shows that regardless of the reduction in all
multidimensional poverty measurements (H, M0, M1 and M2) in both urban and rural
areas, imbalances remain. In fact, the imbalance between urban and rural areas has steadily
increased for all analysed multidimensional measures between 1997 and 2010, particularly
with regard to the rural/urban ratio for the multidimensional poverty headcount (H), which
increased from 1.7 to 2.2.
Finally, regarding the multidimensional poverty gap (M1) and severity (M2), a greater
reduction in severity (M2) is observed, suggesting that poverty reduction achievements
have reached the poorest population through targeting.

Acknowledgments This work was undertaken while the authors were working for the National Planning
Department of Colombia (NPD); the project is an initiative of the National Planning Department, and it was
funded in full by the NPD. We would like to thank Esteban Piedrahı́ta and Juan Mauricio Ramı́rez for taking
the initiative to design a CMPI. We also thank James Foster (George Washington University) and Sabina
Alkire, José Manuel Roche and Diego Zavaleta, from the Oxford Poverty and Human Development Ini-
tiative (OPHI) for their encouragement and critical comments during the design and development of the
indicator. We thank Jorge Ivan González, Jairo Nuñez, Hugo López, Raquel Bernal, Ximena Peña and
Alfredo Sarmiento for their clever and thoughtful comments, and we thank Yolanda Riveros for her careful
work as a research assistant. Also, thanks to the Social Development and Urban Development Divisions at
the National Planning Department for the advice on choosing indicators consistent with the priorities of
public policy. Finally, we would like to thank Hernando José Gómez and José Fernando Arias for promoting
the use of the CMPI in the design and orientation of public policy in Colombia. This version of the paper has
benefited from the insights and suggestions of the anonymous referee and Maria Iacovou (University of
Cambridge).

Conflict of interest We (Roberto Angulo, Yadira Dı́az and Renata Pardo) declare that we do not have any
conflict of interest for the publication of this original research article.

Compliance with ethical standards We, Roberto Angulo, Yadira Dı́az and Renata Pardo, authors of the
article ‘The Colombian multidimensional poverty index: measuring poverty in a public policy context’’,
certify that we comply in full the ethical responsibilities of authors of the journal Social Indicators Research
outlined in the journal’s website (http://www.springer.com/social?sciences/journal/11205) accessed on the
23rd of February of 2015. For this purpose, we follow acknowledging the funding upon this work was
developed, and disclosing no potential conflicts of interest for the publication of this manuscript as an
original research article.

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Appendix

See Figs. 8, 9, 10, 11 and Tables 8, 9.

Inadequate material for external walls

Non aendance to school

Inadequate flooring material


2010
Child labor 2008
2003
Limited access to healthcare services
1997
Longstanding unemployment

Limited access to infant care services

No access to improved water sources

Inadequate eliminaon of sewage waste

Illiteracy

Crical overcrowding

No health insurance

School lag

Low educaonal achievement

Informal labor

0% 20% 40% 60% 80% 100%

Proporon of deprived populaon in each indicator

Fig. 8 Proportion of deprived population across the CMPI considered indicators, 1997–2010 Raw
headcount ratios. Source: LSMS

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R. Angulo et al.

Urban area

Multidimensionally poor population


100%

80%

60%

40%

Robust band of
20%
k values

0%
7% 20% 33% 47% 60% 73% 87% 100%
k-threshold of multidimensional poverty

1997 2003 2008 2010

Rural area
Multidimensionally poor population

100%

80%

60%

40%

Robust band of
20% k values

0%
7% 20% 33% 47% 60% 73% 87% 100%
k-threshold of multidimensional poverty

1997 2003 2008 2010

Fig. 9 Multidimensional poverty headcount ratio H for different values of k, urban and rural areas.
Source: LSMS

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The Colombian Multidimensional Poverty Index: Measuring...

Urban area Rural area

80% 80%

60% 60%

40% 40%

20% 20%
7% 13% 20% 27% 33% 40% 47% 53% 60% 67% 73% 80% 7% 13% 20% 27% 33% 40% 47% 53% 60% 67% 73% 80%

1997 2003 2008 2010 1997 2003 2008 2010

1997 2003

80% 80%

60% 60%

40% 40%

20% 20%
7% 13% 20% 27% 33% 40% 47% 53% 60% 67% 73% 80% 7% 13% 20% 27% 33% 40% 47% 53% 60% 67% 73% 80%

Urban Rural Urban Rural

2008 2010

80% 80%

60% 60%

40% 40%

20% 20%
7% 13% 20% 27% 33% 40% 47% 53% 60% 67% 73% 80% 7% 13% 20% 27% 33% 40% 47% 53% 60% 67% 73% 80%

Urban Rural Urban Rural

Fig. 10 Average deprivation rate suffered among the poor population ðAÞ for different values of k, urban
and rural areas.
Source: LSMS

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Rural Area
Urban area
0.60 0.60

0.50 0.50

0.40 0.40

0.30 0.30

0.20 0.20

0.10 0.10

0.00 0.00
7% 20% 33% 47% 60% 73% 87% 100% 7% 20% 33% 47% 60% 73% 87% 100%
Value of K Value of K
1997 2003 2008 2010 1997 2003 2008 2010

1997 2003
0.60 0.60
0.50 0.50
0.40 0.40
0.30 0.30
0.20 0.20
0.10 0.10
0.00 0.00
7% 20% 33% 47% 60% 73% 87% 100% 7% 20% 33% 47% 60% 73% 87% 100%

2008 2010
0.60
0.60
0.50
0.50
0.40
0.40
0.30
0.30

0.20 0.20

0.10 0.10

0.00 0.00
7% 20% 33% 47% 60% 73% 87% 100% 7% 20% 33% 47% 60% 73% 87% 100%

Value of K Value of K

Urban Rural Urban Rural

Fig. 11 Adjusted multidimensional headcount poverty ratio ðM0Þ for different values of k, urban and rural
areas.
Source: LSMS

123
Table 8 Indicators’ redefinition for calculating the adjusted gap in each dimension in which poor households are deprived
Variable Cutoff point for each indicator Poverty gap calculation
 
Education (9 ? years of schooling) Household ave. 9 years People 5 years old and over with 9 or more schooling years
1  100
People 15 years old and over in the household
Note: The cutoff point for the calculation of H is a household average of 9 years of education, while the poverty gap is calculated as the
percentage of adults who have fewer than 9 years of education. This means that some households which are not classified as deprived
on this indicator for the purposes of H, will have one or more adult members with fewer than 9 years of schooling, and thus would be
indicated as having a poverty gap on this indicator. However, the gap for these households is not included in the calculations of M1
and M2, because gaps are defined only for households deprived on each dimension
 
Literacy 100 % People 15 years old and over that know how to read and write
1  100
People 15 years old and over in the household
 
School attendance 100 % Children between 6 and 16 years old attending school
1  100
Children between 6 and 16 years old
 
No school lag 100 % Children between 7 and 17 years old with no school lag
1  100
Children between 7 and 17 years old
0 1
Access to childcare services 100 % Children between the ages of 0 and 5 in the household with
B simultaneous access to health; nutrition; and; education C
@1  Children between 0 and 5 years old A  100
The Colombian Multidimensional Poverty Index: Measuring...

 
Children not working 100 % Children between 12 and 17 years old that are not working
1  100
Children between 12 and 17 years old
 
No one in longterm unemployment 100 % Longterm unemployed
 100
Economically Active Population
 
Formal employment 100 % Employed and affiliated to a pensions fund
1  100
Adjusted Economically Active Population
Note: As previously explained long-term unemployed are removed from the denominator in order to avoid counting them in deprivation
twice. On the other hand, children under the age of 18 who hold a job are also eliminated in order to be congruent with the non child
labor policy
 
Health insurance 100 % People over 5 years old with health insurance
1  100
People over 5 years old

123
Table 8 continued

Variable Cutoff point for each indicator Poverty gap calculation


0 1

123
Access to health services 100 % People with access to a health institution; doctor or dentist
B in case of need C
@1  People in need of health care A  100

  
Critical overcrowding Urban: three or more people per room ðNumber of rooms  3Þ  1
1  100
Total household members
  
Rural: more than three people per room ðNumber of rooms  3Þ  1
1  100
Total household members
R. Angulo et al.
The Colombian Multidimensional Poverty Index: Measuring...

Table 9 CMPI association with NDP sector goals


CMPI National Development Plan Goals 2010–2014

Dimension Variable— NPD indicator Baseline Goal 2014


indicator 2009

Household Average Average number of completed 9.15 9.80


educational education school years by the population completed completed
conditions achievement between the ages of 15 and 24 school school
years years
Literacy Illiteracy rate (15 and older) 6.70 % 5.70 %
Childhood and School Gross rate of secondary school 79.27 % 91.0 %
youth conditions attendance coverage
No school lag School desertion rate per year 5.15 % 3.80 %
(preschool, elementary and
secondary)
Access to N.A
childcare
services
Children not Number of boys, gilds and 1,768,153 1,149,300
working adolescents (5–17 years of age) in
the job market
Health Health Affiliated to a contributory system 18,116,769 19,593,047
insurance Coverage of a subsidized system 90.27 % 100.00 %
Access to N.A
health
services
Access to public Access to water Water service coverage 91.79 94.12 %
utilities and source households households
housing Adequate Sewer service coverage 87.48 % 90.76 %
conditionsa elimination households households
of sewer
waste
Adequate Percentage of households with 9.40 % 6.70 %
flooring shortfalls in building materials
Adequate
exterior walls
No critical Percentage of households with 12.50 % 8.20 %
overcrowding critical overcrowding
a
2014 goals for access to public utilities and housing conditions dimension were agreed upon by the
Division of Urban Development of the National Planning Department

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